B&B head lashes RCL’s performance

The head of Babcock & Brown International,
Michael Larkin
, has hit out at the performance of residential property group RCL Group as he and a Payce Consolidated executive seek board seats on the property minnow.

Babcock & Brown and Payce, which together hold about 18.5 per cent of the group, have requisitioned a February 15 meeting to seek the removal of directors
Richard Gelski
and
Robert Wright
, and to appoint Mr Larkin and Payce chief financial officer Brian Bailison as directors.

Mr Larkin said that RCL had been focusing on projects that had no equity value left. “The projects would only seek to recover the project debt and they don’t add any value for shareholders," he said.

RCL had good projects, particularly in Victoria, where he said the group should have focused and developed more quickly.

He added that RCL’s New Zealand projects were in effect worthless to shareholders as they would not return more than their project debt, which was in default.

This was despite the incumbent board emphasising that there was substantial value in these projects.

RCL’s security price has shrunk to 4.6¢ from its float price of $1 in June 2006 and the agitators claim significant support from other shareholders as the register has been stable.

Mr Larkin said there was unhappiness about the group agreeing to cross-collateralise some project level debt held by the Bank of Scotland International with its senior debt position in 2010. He argued that BOSI’s project level debt would have been valueless, but it had in effect jumped the queue to the detriment of shareholders.